House Vote Expected This Week on a “Robin Hood in Reverse” Tax Package
H.R. 8 Includes Bush Tax Cuts for the Rich, Reduced Estate Taxes, and Higher Taxes for Low-income Working Families
In the next day or two, the House is expected to vote on tax legislation (H.R. 8) that would substantially increase the federal deficit while doing the following:
- extending all the Bush-era income tax cuts, including those that exclusively benefit the richest two percent of Americans;
- extending the 2010 temporary estate tax cuts that exempt all but the richest 0.3 percent (estates up to $10 million per couple); and
- ending tax credit improvements for low- and moderate income families enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA).
H.R. 8 would ensure that no millionaire or billionaire would lose a penny of tax cuts, but 13 million middle- and lower-income families would lose tax benefits – including almost three-quarters of low-income families with children and 37% of all families with children.
In contrast, the bill introduced by House Democratic leaders, H.R. 15, would limit the tax cuts for the richest two percent (who would still fare very well), while extending the Bush-era tax cuts on income up to $250,000 per couple ($200,000 for a single taxpayer) and also extending the ARRA tax cuts for working families.
A recent analysis by the Center for Tax Justice found that the tax credit changes in H.R. 8 would have the following effects for Wisconsin in 2013:
- More than 116,000 Wisconsin families with over 228,000 children would have a smaller child tax credit (CTC), including over 48,000 families who would lose that credit altogether.
- Over 69,000 families would get a smaller federal Earned Income Tax Credit (EITC).
- A total of more than 155,000 Wisconsin families, with nearly 320,000 children, would lose a over $139 million in 2013 from the reduction of one or both credits.
- The average loss per affected Wisconsin family would be $898.
The changes made in 2009 to the EITC and CTC have prevented millions of families from falling into poverty during this very challenging economic time. It would be unconscionable and unwise to end these supports for families with parents working in low-wage jobs, while at the same time extending the temporary reductions in the estate tax that benefit the wealthiest Americans and exempt all but 3 out of 1,000 estates. (Read more in this CBPP paper about the estate tax issue.)
Moreover, Congress needs to address the goal of reducing the deficit without suppressing the fragile economic recovery. That will require limiting the tax cuts, not simply limiting future spending. It calls for a balanced approach to deficit reduction that requires the rich to pay their fair share, while taking care not to enact policies that will increase poverty or income inequality and suppress the demand for goods and services.
In contrast to H.R. 8, the Democrats’ plan takes a balanced approach and doesn’t increase taxes by an average of almost $900 for more than 155,000 Wisconsin families with children.